A14 Cambridge to Huntingdon Improvement Scheme Registration ID: 10030900. Suffolk County Council Written Representation, Comments on applicant’s response to RRs and Response to first written questions - June 2015 1. Introduction 1.1. Suffolk County Council (“the County Council”) submitted a detailed Relevant Representation (RR)1 and does not repeat those comments here, the majority of which remain under discussion with the applicant. 1.2. The County Council submits to this deadline this Written Representation (WR), including a response to the applicant’s comments on our RR and a response to the Examining Authority’s first written questions. 1.3. The County Council will also be submitting to Deadline III a Statement of Common Ground (SoCG) with the applicant which sets out the status of discussions following the submission of our RR. Rather than duplicate the contents of that document here, we would refer the Examining Authority to it in due course. As that document will reflect, discussions remain ongoing with the applicant on a number of matters, however, to summarise, our principal concern remains the resilience of the scheme in the face of the applicant’s own traffic forecasts. 1.4. We believe that: a solution/process needs to be forthcoming to address the future capacity issues predicted by the applicant on the Cambridge Northern Bypass and; as the section from Bar Hill to Swavesey will be carrying volumes of traffic above the recommended service level in the design year, it should be future proofed to allow efficient expansion – as is proposed by the applicant for the Bar Hill junction itself. 1.5. As set out in our RR, we also have concerns about the adequacy of the diversion routes available, underlining the need for resilience in the scheme itself. We retain particular concern about the proportion of weaving traffic between Brampton Interchange and Brampton Hut and thus incident risk and ask the applicant to consider further how risks associated with an incident can best be managed. 1.6. Further detail on these matters will be in the SoCG. 1.7. Additionally, the County Council remains in discussion with the applicant on the construction-phase socio-economic and transport impacts. As noted below we do not accept the applicant’s response to our RR.
1 Representation No. 503
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2. Response to the applicant’s response to the County Council’s RR 2.1. The page numbers below refer to those in document HE/A14/EX/25 Response to Relevant Representations. 2.2. Page 41: The applicant appears to confirm that changes to the design of the scheme, as informed by the revised traffic modelling, were proposed post-submission (and hence were not fully reflected when we made our RR). Our concerns in this matter, however, extend beyond junction layout to the performance of the main carriageway and the adequacy of the weaving sections. While the applicant has provided us with further information, which appears to confirm our concerns, it seems inappropriate to comment in detail on that given it is not before the examination. We suggest it might be helpful to have this evidence submitted to enable us to comment further. 2.3. Page 45: Our point in emphasising the (in)adequacy of diversion routes was to underline the need for scheme resilience to minimise the disruption to road users should an incident occur. This matter remains under discussion. 2.4. Page 66: Chapter 16 of the Environmental Statement (ES) does not consider any negative impacts on the labour market, i.e. the consequences of the labour demand of the scheme. It is not clear that taking the ‘construction sector’ in its broadest terms would represent the extent of the labour pool available to resource the project. The statement that economies outside Cambridgeshire were not considered in detail as the impacts were expected to be centred therein is contrary to the ES, which anticipates a high proportion of jobs going to workers outside of Cambridgeshire, whose own economy is not highly geared towards construction and civil engineering projects (see our RR paragraphs 6.1-6.12). The applicant has not provided any evidence of its assessment that the labour market within the travel to work area is sufficient to support the project. That Hertfordshire has 30,000 construction workers is only relevant as part of an analysis that indicates what proportion of those have the requisite skills, live within the travel to work area and, having regard to the nature of other construction projects which coincide with the scheme, are likely to be available to work on it. This matter therefore remains under discussion. 2.5. We note that the applicant has not responded to paragraphs 6.13 and 6.14 of our RR, which queried where the transport assessment of the construction impacts of the development was presented in the application. 2.6. Page 67: the County Council accepts that onsite accommodation for workers is likely to be attractive and thus reduce the burden on tourist accommodation. It is not clear however how such provision is secured in the draft Development Consent Order. 2.7. Page 114: The applicant has provided additional information to the County Council which sensitivity tests the output of CHARM (2) to include the full quantum of development at Northstowe and Alconbury. This information which we hope will be made available to the Examining Authority report does, in our view, highlight the need to consider further the issues likely to arise on the Bar Hill to Swavesey section and Cambridge Northern Bypass. This matter therefore remains under discussion. 2.8. Page 115: See above. The County Council supports the proposals for Bar Hill junction. 2.9. Page 116: the County Council considers further evidence is required in particular in relation to the Bar Hill to Swavesey section to evidence that future proofing does not represent good value for money given that we believe these works would be limited to: Ensuring the design of the main carriageway, local access road and footway/cycleway/equestrian track are aligned to facilitate future widening of the A14
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Providing a wider span at the overbridge linking Robin’s Lane to the local access road This matter therefore remains under discussion. 2.10. Page 128: Again, the applicant has provided additional material “A14 Link Capacity Report”, but this does not address our concerns, rather it confirms them. We suggest given the importance of the subject matter this evidence should also be provided to the Examining Authority for all parties to comment on. This matter therefore remains under discussion.
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3. Response to first written questions Question 1.7.6, benefit of the scheme to the regional economy during construction 3.1. The County Council has set out in some detail in its RR, supplemented by additional comments at paragraph 2.4 above, setting out why it believes the applicant’s assessment of the socio-economic impacts during construction is partial. Question 1.7.7, the case for the scheme 3.2. Notwithstanding our current concerns with the assessment of the socio-economic and transport impacts of the scheme during construction as presented in the application, our experience from the delivery of the A11 Fiveways to Thetford scheme is that ‘traffic clinic’ meetings which facilitated regular contact with local business and local authority partners was a positive one in managing traffic impacts during construction. 3.3. As such, in order to minimise disruption during the construction phase, a degree of which is inevitable, we would recommend pursuing similar collaborative working protocols for the proposed scheme. This is something that is best reflected in the Code of Construction Practice. 3.4. With regard to the operational benefits of the scheme, while we maintain concerns over the current design in particular areas, we remain strongly supportive of the scheme’s intentions. 3.5. In 2014, the County Council commissioned Ernst & Young LLP to analyse the economic impact of congestion on the A14 on Suffolk’s economy. That report entitled “The A14 and Suffolk’s Economy”, which is appended to this submission, identified the A14 as a vital link between Suffolk and the UK’s main north/south and east/west transport corridors, being heavily used for daily commuting and movement of freight. 3.6. The report notes the cost of congestion to Suffolk, for example in terms of loss of productivity, and noted that nearly a quarter of Suffolk’s local GVA (£3.2bn) depends to a degree on the efficient operation of the A14. 3.7. The current scheme would not of course eliminate congestion on the entire A14, but would certainly make a valuable contribution to that aspiration. Please see the enclosed report for further details of the importance of the A14 to Suffolk as a whole and to particular key businesses such as the Port of Felixstowe at the A14’s eastern terminus.
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The A14 and Suffolk’s economy Economic impact of congestion
February 2014
Contents
Contents
Disclaimer ...... 1 Executive summary ...... 2 Glossary ...... 4 Introduction ...... 5 1. Suffolk and the A14 ...... 6 1.1 Economic profile of Suffolk ...... 6 1.2 The port of Felixstowe ...... 7 1.3 The A14 and its economic role ...... 8 2. Methodological approach ...... 12 2.1 Overview ...... 12 2.2 Literature review and qualitative inputs ...... 12 2.3 Survey-based data collection ...... 13 2.4 Economic impact model ...... 14 3. Our findings ...... 15 3.1 Road investment and economic growth: evidence from the literature ...... 15 3.2 Dependence of Suffolk on the A14 ...... 17 3.3 Economic impact of congestion on the A14 in Suffolk ...... 19 3.4 Summary and conclusion ...... 24 Appendix A Sources ...... 26 Appendix B Suffolk economic profile ...... 27 Appendix C Economic assumptions ...... 28 Appendix D Survey ...... 31 Appendix E Survey responses ...... 37 Appendix F Economic impact assessment ...... 39
EY i Disclaimer
Disclaimer
This analysis was prepared by Ernst & Young LLP (EY) as part of a report commissioned by the Suffolk County Council (SCC) to analyse the economic impact of congestion on the A14 on Suffolk’s local economy. It is not designed to represent a holistic cost-benefit assessment, nor does it therefore present findings in respect of the overall net benefits or dis-benefits of the current A14 improvement proposal.
The opinions of third parties set out in this publication are not necessarily the opinions of the global EY organisation or its member firms. Moreover, they should be viewed in the context of the time they were expressed. This publication contains information in summary form, mostly extracted from the analysis of individual responses to a survey and may not be representative of all stakeholders. It is therefore intended for general guidance only and is not intended to be a substitute for detailed research or the exercise of professional judgment.
Any use of the report, subsections thereof or conclusions therefrom should be agreed with EY in advance, and may require the signature of hold harmless letters by recipients. Neither EY nor any other member of the global EY organisation can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication.
EY 1 Executive summary
Executive summary
The A14 trunk road is a major, 127-mile-long road that plays a strategic role in Suffolk’s economy. It is a vital part of the UK’s main North/South and East/West ground transport corridors and is widely used both for daily commuting and for the haulage and distribution of goods.
Severe congestion on the A14 has been a recurring issue affecting Suffolk as well as Cambridgeshire. Infrastructure bottlenecks and more specifically road congestion typically cause a set of well-identified economic disbenefits: time lost in traffic affects the productivity of commuting employees, who also incur unnecessary fuel and time costs that hinder their quality of life. Hauliers also incur additional fuel costs as part of their daily business activities, as well as the loss of speed-based revenues, and other time-related opportunity costs when incidents prevent free flow.
In order to relieve congestion on one of the A14 ‘hotspots’ between Cambridge and Huntingdon, the UK government has committed to spend £1.5bn on a road improvement scheme, fully-funded by the UK taxpayer.
Recent economic research shows that localised road improvement works can, to some extent, generate local economic growth, notably through increased productivity and reduced transport costs.
Responses by a sample of Suffolk-based businesses to an online survey have allowed us to estimate the degree of dependency of Suffolk on the A14, the economic cost of congestion on the A14 to Suffolk’s economy and subsequent economic potential that could result in the event that the capacity of the A14 was increased so as to materially eliminate the effects of congestion in Suffolk. Results from the analysis are detailed in Table 1 below and key findings include:
► Nearly a quarter of Suffolk’s local GVA (c. £3.2bn) depends to a degree on the existence and efficient operation of the A14;
► The direct cost of congestion of the A14 to Suffolk employees is estimated in the region of £45m per annum;
1 ► Under current economic assumptions as to the effect of infrastructure growth on GDP , the current proposal by the Highways Agency could generate up to £150-175m2 in additional GVA in Cambridgeshire, Suffolk, Northamptonshire and the rest of the UK;
► If implemented today, an increase to the capacity and resilience of the Suffolk section of the A14 eliminating the effects of congestion3 could enable up to £362m in local GVA per annum4 and help create up to 7,100 jobs in Suffolk; and
► Assuming congestion was fully resolved immediately, additional tax revenue generated in Suffolk as a result could amount to £137m per annum, with £6.8m raised locally5.
1 Infrastructure spending-to-GDP ratio of 0.1, based on current academic consensus. See Section 3.1.2 and Appendix A for sources. 2 In the first year of operation of the scheme and then per annum, assuming traffic remains constant over time. 3 Assuming permanent free flow on the relevant section of the A14 once additional capacity has been added. 4 Nominal GVA, at current prices, assuming solution to congestion is fully workable today and traffic remains constant once additional capacity has been added. The margin includes the potential additional impact of ancillary A14 improvements currently undertaken. 5 UK tax-to-GDP ratio: 37.8% (Eurostat, 2011), including corporation tax, income tax, social contributions and other taxes, duties and levies (including VAT). 5% of UK tax revenue is raised directly by local authorities (Source: IFS, 2007). Nominal value at current prices, assuming the solution is fully workable today.
EY 2 Executive summary
Table 1: Summary of annual economic impact of current congestion on the A14 for Suffolk (current prices) Source: EY analysis Direct cost of A14 congestion to commuters (£m, p.a.)
Total estimated direct cost of congestion to Suffolk commuters using the A14 44.9
Gross Value Added (£m) to Suffolk (p.a.)
Direct4 139.2
Indirect4 153.5
Induced4 69.5
Total annual GVA potential (current prices)4 362.2
% of current Suffolk GVA 2.8%
Tax revenue (£m p.a.)
% Tax revenue-to-GDP ratio 37.8%
Total annual tax revenue potential (current prices) 136.9
Employment
Direct 4,606
Indirect 1,839
Induced 655
Total 7,100
% of current Suffolk jobs 2.0%
Potential economic benefits of the current A14 improvement scheme (shared)
GVA (£m p.a.) 150-175
Tax revenue (£m p.a.) 57-66
EY 3 Glossary
Glossary
CEBR Centre for Economics and Business Research
CPI Consumer Price Index
DfT Department for Transport
EY Ernst & Young LLP
F2N Felixstowe-to-Nuneaton
GBP British Pound Sterling
GVA Gross Value Added
HA Highways Agency
HGV Heavy Good Vehicles
IFS Institute for Fiscal Studies
ILCH Index of Labour Cost per Hour
LG London Gateway
LUZ Large Urban Zones
ONS Office of National Statistics p.a. Per annum
SACTRA Standing Advisory Committee on Trunk Road Assessment
SCC Suffolk County Council
SCoC Suffolk Chamber of Commerce
ULCS Ultra-Large Container Ships
VoT Value of time
EY 4 Introduction
Introduction
In November 2013, Ernst & Young LLP (EY) was appointed by Suffolk County Council (SCC) to undertake a study on the economic dis-benefits of tolling an improved section of the A14 for Suffolk’s local economy. This scheme was initially envisaged by the UK Government in order to fund part of a broader £1.5bn A14 improvement programme, aiming to reduce congestion.
On the 4 December 2013, the Chief Secretary of the Treasury announced that the tolling proposal would not go ahead and that the proposed scheme would be funded entirely out of general taxation.
EY was then asked by the Council to re-focus the study on (i) the current economic impact of the A14 on Suffolk and (ii) the potential economic benefits that would result from a reduction in congestion on the road.
This report presents our findings on these two subjects based on:
► A review of relevant economic literature, mainly centred around infrastructure-based economic development and the economic impact of congestion;
► A data collection exercise, primarily through responses to an online survey agreed between EY and SCC and relayed by Suffolk’s Chamber of Commerce (SCoC) to its members, assessing the magnitude of quantitative and qualitative consequences of congestion on the A14 for Suffolk’s business community; and
► An economic impact model using national input/output tables produced by the Office of National Statistics (ONS), economic multipliers and EY analysis to derive an estimate of the impact of congestion in terms of local economic output, local Gross Value Added (GVA), employment and tax revenue.
The report’s structure is laid out as below:
► Section 1 outlines the importance of the A14 in the broader economic context of Suffolk;
► Section 2 describes our methodological approach to the issue of estimating the economic impact of the congestion of the A14 on Suffolk’s local economy; and
► Section 3 presents our findings.
The economic impacts presented in this report are in current prices, in million pounds sterling (GBP) and full-time equivalents (FTE) job units.
EY 5 Suffolk and the A14
1. Suffolk and the A14
1.1 Economic profile of Suffolk Suffolk has a diversified economic structure, with greater emphasis on the primary and secondary sectors6 than the overall UK economy. As shown in Table 2 below, in 2012, the secondary sector and its supply chain (including primary products) represented almost half of the regional GVA (49.3%) compared to 40.3% in the overall UK economy. As a comparatively less service-based economy than the UK as a whole, Suffolk’s economic growth is therefore more dependent on an efficient supply of goods, and therefore on the quality and free flow of physical transport infrastructure.
Table 2: Economic structure of Suffolk compared to the overall UK economy Source: ONS, EY analysis
Sector GVA (2012, £m p.a.) % (Suffolk) % (UK)
Agriculture, forestry and fishing 255 1.9 % 0.7 %
Mining and quarrying 470 3.6 % 2.3 %
Manufacturing 1,928 14.7 % 10.3 %
Construction 1,053 8.0 % 8.8 %
Distribution; transport; accommodation and food 2,768 21.1 % 18.2 %
Total secondary sector and supply chain components 6,474 49.3% 40.3%
Information and communication 569 4.3 % 6.5 %
Financial and insurance activities 626 4.8 % 8.6 %
Real estate activities 1,358 10.4 % 10.6 %
Business service activities 1,251 9.6 % 16.8 %
Public administration; education; health 2,355 18.0 % 14.2 %
Other services and household activities 461 3.5 % 3.0 %
Total services 6,620 50.7% 59.7%
Total 13,094 100% 100%
Table 3 shows that both Suffolk’s and East Anglia’s population are expected to grow at a higher rate than the rest of the UK from 2014 to 2020. Suffolk’s unemployment rate is currently lower than in the overall UK economy. The region’s economic strength and diversity will need to be maintained to accommodate the expected population growth, namely requiring a sustained level of job creation in the region and sufficient investment to maintain and/or improve the capacity and efficiency of existing infrastructure such as utility networks, transport and housing.
6 For the purpose of this analysis, the primary sector includes all extractive industries (agriculture, fishing, forestry, mining and quarrying). The secondary sector includes manufacturing, construction and distribution.
EY 6 Suffolk and the A14
Table 3: Demographic profile of Suffolk Source: ONS
Population Unemployment (%) District Forecast % growth Forecast % growth Actual 2012 (‘000s) 2012 2012-16 2016-20
Suffolk 732 3.2% 3.0% 6.4%
East Anglia 5,907 4.0% 3.8% 6.7%
UK 63,705 2.4%7 2.1%7 7.5%8
Insight As a diversified, yet less service-based economy than the rest of the UK and with a growing population, Suffolk depends on the quality and efficiency of physical transport infrastructure.
1.2 The port of Felixstowe The Port of Felixstowe is undoubtedly a key economic hub for Suffolk and the whole East Anglian region, as well as one of the UK’s key ports. In 2012, the port handled 3.7 million twenty-foot equivalent units (TEU) of containers, i.e., over 40% of the UK’s export and import container trade. It is the UK’s busiest container port and the sixth busiest in Europe9, with c. local 32,000 jobs dependent on its activity10, i.e., 9% of Suffolk’s jobs. As shown in Figure 1 below, Felixstowe has experienced the fastest growth in traffic amongst its European peers in 2012.
Figure 1: Growth in container traffic at major European ports (2011-2012) Source: Port of Felixstowe, Lloyd’s List
10%
2012) - 5%
0%
-5%
-10%
Growth in container traffic (2011TEUin traffic containerin Growth -15%
Antwerp
Duisburg
Le Havre Le
Hamburg
Rotterdam
Felixstowe
Zeebrugge
Southampton Bremerhaven St Petersburg St
The first phase of the Felixstowe South redevelopment project (Berths 8&9) opened in November 2011. Berth 9 will be extended during 2014 and the next phase (Berth 10), will be constructed at a future date to further increase total capacity.
7 Source: ONS, 2012, assuming no structural change compared to current population characteristics. 8 Source: ONS, as at 31 October 2013. 9 Source: Port of Felixstowe 10 Source: Port of Felixstowe
EY 7 Suffolk and the A14
The third rail terminal that has doubled the port’s rail freight capacity opened in 2013. It is part of the ongoing Felixstowe to Nuneaton line project (F2N) which directly links the East of England with the Midlands rather than via London. However, this new line will also be used to relieve current constraints on the Felixstowe to London line, and is therefore unlikely to accommodate all additional lorry journeys generated by the expansion of the port of Felixstowe.
A recent development in the shipping industry is the rise of Ultra-Large Container Ships (ULCS). In October 2013, Felixstowe docked four such ships over a 24-hour period. Growth in UCLS traffic will contribute to future growth in container traffic at Felixstowe and on the A14, as it is the only high-capacity road that can support heavy goods vehicle (HGV) traffic directly from Felixstowe to other roads serving the rest of the country. Currently, 87% of containers unloaded at Felixstowe are destined inland, with only 3% sent to Suffolk, and more than 70% of the overall container traffic from Felixstowe is using the A1411.
The ongoing London Gateway (LG) deep water port project, situated on the Thames Estuary, will also help absorb part of the increase in container traffic. When fully developed, the port will be capable of handling 3.5 million TEU per annum. However, a recent study has shown that handling one single container at Felixstowe could be on average £25 cheaper than using the future London Gateway facilities (£301/container at Felixstowe v. £326 at LG) due to diversion costs from key Benelux shipping lanes12.
Expected growth of container traffic at the Port of Felixstowe and the structural limitations of current rail transport capacity are therefore likely to induce an increase in traffic on the A14, which will make improvements necessary if Felixstowe is to keep its current competitive advantage over other UK ports.
Insight The Port of Felixstowe is the UK’s busiest container port and traffic is expected to grow significantly over the current decade. 87% of containers are going inland and 70% are using the A14.
1.3 The A14 and its economic role 1.3.1 The A14 in Suffolk The A14 is a major road running 127 miles from the Port of Felixstowe, Suffolk to the Catthorpe Interchange, at the junction of the M1 and M6 motorways near Rugby, Warwickshire. It passes through the counties of Suffolk, Cambridgeshire and Northamptonshire.
In Suffolk, from the Port of Felixstowe, the road heads west, bypassing Ipswich to the south via the Orwell Bridge and to Stowmarket, Bury-St-Edmunds and Newmarket, therefore linking most of Suffolk’s main urban centres. As such, it is a strategic road for Suffolk, from both a haulage and commuting perspective.
Beyond Suffolk, the A14 runs westwards towards the city of Cambridge, where it meets the M11. Heading west towards Huntingdon, it then meets the A1 to London on the Huntingdon bypass, and ends 63 miles further west at the Catthorpe Interchange between the M1 and M6 motorways.
11 Source: Port of Felixstowe 12 Source: MDS Transmodal Felixstowe Report, Comparing user costs through different container ports, p.17
EY 8 Suffolk and the A14
Figure 2 presents a schematic map of the A14.
Figure 2: Schematic map of the A14 Source: EY, Google Maps
1.3.2 Key economic benefits of the A14 to Suffolk The A14 is an important link between the North, South and East of the UK. It is the main logistical path for goods unloaded in the Port of Felixstowe and distributed to the rest of the country, as well as those produced locally and exported via Felixstowe. Due to its strategic location, it is also a major route to market for goods produced elsewhere in the UK. The A14 will become important as freight-related traffic growth on the A14 is forecast to increase by around 1% per annum13.
From a regional perspective, the A14 also plays an important role in enabling the daily commute between Suffolk’s urban centres and neighbouring Cambridgeshire. Expected population and employment growth in East Anglia will materialise in several proposed housing developments close to the A14, notably in the north of Cambridge14 but also in Suffolk15, which will contribute to further increases in the use of the A14 in the upcoming years.
Its impact on tourism is also important. The majority of tourists use cars to reach Suffolk due to a reported unreliability of train services to the area but the touristic potential of Suffolk is somewhat constrained due to the perception of congestion16.
Overall traffic growth on the A14 is forecast to increase by around 15% by 202113, putting further pressure on the road and increasing the potential for congestion. Improving the A14 now is therefore crucial to help mitigate this.
13 A14 Study, Output 1, Steer Davies Gleave, December 2011 14 Ibid. Local housing developments include Alconbury and the proposed ‘new town’ of Northstowe (10,000 homes). 15 Notably in Brandon (Brandon Bypass, 2000 homes), Martlesham (1,800 homes), Felixstowe, Walton and Trimleys (1,760 dwellings) as well as smaller local projects (c. 2,870 homes). 16 Source: Suffolk Coastal and Waveney district councils
EY 9 Suffolk and the A14
1.3.3 The A14 improvement scheme 1.3.3.1 Cambridge-to-Huntingdon The scheme17 proposed by the Highways Agency (HA) will be focusing on improving the free flow of traffic on the section between Cambridge to Huntingdon, which serves as a major North-South junction between the A1 and the M11.
The proposed scheme starts in Ellington on the existing A14, to the west of Huntingdon. A new Southern Bypass to Huntingdon (the ‘Bypass’) will be built from Ellington. The Bypass will proceed south and east to join the existing A14 near the village of Swavesey.
The A1 between Alconbury and Brampton will be widened to cope with additional traffic. The existing portion of the A14 between Swavesey and Ellington will be de-trunked18, while the existing portion of A14 going south east from Swavesey will also be widened to provide extra capacity. Junctions at Girton, Histon and Milton will be improved.
Figure 3 below provides a graphic representation of the proposed scheme.
Figure 3: The A14 scheme proposals Source: The Highways Agency
The improvement scheme primarily aims to alleviate congestion on the Cambridge to Huntingdon segment of the A14. This would particularly help commuters in Cambridgeshire as well as Suffolk employees commuting to the Cambridge area for work. It would also relieve a major congestion hotspot for hauliers delivering goods from the port of Felixstowe into the mainland. However, other important congestion hotspots situated on the Suffolk portion of the A14, such as the Orwell Bridge19, will not be treated as a result of this scheme while evidence suggests that the road’s current lack of resilience when faced with a disruptive
17 Highways Agency, A14 Cambridge to Huntingdon Improvement Scheme: Public Consultation, December 2013. 18 Trunk roads are ‘de-trunked’ for example, when superseded by a motorway following a similar route, in which case they normally become ordinary ‘A’ roads. The UK government has de-trunked a significant part of the Strategic Road Network (SRN) since the late 1990s, transferring responsibility to local councils to allow the Highways Agency to focus on a selection of core trunk roads, mostly dual carriageways and motorways. 19 The Orwell Bridge carrying the A14 over the Orwell River on the south of Ipswich is one of these hotspots. Latest published figures from 2006 (Newmarket to Felixstowe Corridor Study, Section 4.16 East of England Regional Assembly, 2006) indicated that it was then operating at 83% of its capacity, with over 60,000 vehicles using it every day. Reliability of the Orwell Bridge holds the key to the A14 Ipswich bypass for commuters and goods vehicles in transit from Felixstowe. According to a recent survey by the Suffolk Chamber of Commerce, its frequent closure due to accidents that are themselves linked to congestion on this part of the road had a significant impact on local businesses (Suffolk Chamber of Commerce: Link).
EY 10 Suffolk and the A14
event (such as an accident or a breakdown) is an important factor contributing to the current congestion situation20.
1.3.3.2 Other ancillary schemes Other A14 improvement projects of lesser magnitude are currently being undertaken, as described in Table 4 below.
Table 4: Additional A14 improvement projects Source: HA, SCC
Name Description Cost Location Stage
A14 Junction 23 Spittals Widening and lengthening the £2.6m Huntingdon On hold Interchange Westbound Off- existing slip road to provide Slip Improvement two lanes, each (Huntingdon) approximately 170m long, and including: Installation of a retaining wall; and Amendment to the existing traffic signing on approach to the junction.
A14 Junctions 7-9 Kettering Widening the A14 between £42m Northamptonshire Under Bypass Improvement - junctions 7 and 9 to three construction Highways Agency lanes in each direction.
A14 Junction 31 to 32 Adding an additional lane in £15.7m Cambridge About to Eastbound and Westbound both eastbound and start Improvements (Cambridge) westbound directions of the A14 between junctions 31 and 32. Improving the existing westbound slip roads at the Girton Interchange, junction 31 of the A14, in order to increase their capacity.
M1 Junction 19 Improvement The improved junction will £191m Catthorpe Under Scheme provide the following direct (Leicestershire) construction free-flow links: A14 to M1 northbound; M1 southbound to A14; M6 to A14 in both directions; M6 to M1 southbound; and M1 northbound to M6.
The Cambridge-to-Huntingdon improvement proposal has now entered the planning approval phase and, as part of this process, our work aims to provide further evidence of the overall economic impact of current congestion on the A14, as well as to estimate the benefits that could arise from its improvement.
20 Cf. open contributions from survey respondents in Table E4 (Appendix E). In that regard, as an “A”-designated trunk road, the A14 is not equipped with a hard shoulder nor is it patrolled by traffic officers.
EY 11 Methodological approach
2. Methodological approach
2.1 Overview This study presents an estimation of the annual GVA, employment and gross tax revenue that would be generated in Suffolk if congestion on the Suffolk section of the A14 was fully relieved.
Following the scrapping by the UK government of the initial tolling proposal, our scope of work was respecified21 so as to produce an analysis of the cost of congestion on the A14 to Suffolk’s economy. At the same time, we were asked to consider the potential economic impact of an improved A14 for Suffolk.
In our approach, we have used and combined three complementary analyses that provide a representative picture of the quantum of economic benefits that could be brought to Suffolk under these scenarios.
These analyses are:
1. Literature review and qualitative inputs: a desktop-based review of academic and official literature on the subject of road infrastructure investment and its effects on economic growth through the alleviation of congestion. This provides a theoretical framework that underpins our quantitative assumptions for the economic analysis;
2. Survey-based data collection: a survey-based dataset investigating industry-specific issues related to congestion such as commuting delays and supply-chain costs, as well as other potential revenue and cost variations22. This was supplemented by a limited number of interviews with local stakeholders in Suffolk23; and
3. Economic impact model: a local economic impact model for Suffolk, based on local input/output tables24. This model uses the dataset mentioned above and estimates the direct, indirect and induced value that would be generated in Suffolk by the various A14 improvement scenarios.
The use of each of these analyses is discussed further below.
2.2 Literature review and qualitative inputs Mainstream economic theory suggests that infrastructure investment can affect economic growth as follows:
► Through its direct contribution to Gross Value Added and the additional indirect and induced output arising from construction works; and
► By raising Total Factor Productivity and reducing transaction and other costs for dependent industries.
Our scope of work led us to exclude the immediate effect of road construction works in this analysis: although these works temporarily stimulate economic output and job creation whilst the road is built or improvements are being made, these particular effects cease once improvements are complete.
21 The initial scope of work was limited to an assessment of the potential economic disbenefits to Suffolk of tolling the improved Cambridge to Huntingdon section of the A14, as part of the A14 improvement scheme proposed by the Highways Agency. 22 See Appendix D for the full survey. 23 See Appendix A for the list of individuals interviewed as part of this study. 24 See Appendix F for economic impact assessment methodology
EY 12 Methodological approach
We have therefore focused on the enduring effects of infrastructure on economic growth, both from a macroeconomic and microeconomic perspective. Effects supported by robust theoretical evidence were included in our assumptions.
2.3 Survey-based data collection In order to gather evidence about the magnitude of the economic consequences of current congestion on the A14 for Suffolk’s business community, EY and SCC agreed on a 30- question survey that was accessible to the public on-line via Survey Monkey® from 11 December 2013 to the 12 January 2014.
The survey was advertised by Suffolk’s Chamber of Commerce (SCoC) to its members, through regular reminders on their periodical electronic newsletters and via social networks, as well as publicised in the local press. The full survey is available in Appendix D.
A total of 55 Suffolk businesses responded to the survey. A basic analysis of the sample of respondents can be found in Appendix E.
It should be noted that this survey was specifically designed for businesses and, as such, does not seek to quantify behavioural changes by households or tourists as a result of road improvements nor does it address the economic aspects of potential subsequent changes in land use.
It should also be noted that the sample of respondents is relatively small in size and therefore reflects, but does not exactly mirror, the structure of Suffolk’s local economy. The inherent limitation of any survey-based data collection is a sample bias towards respondents who have a higher stake in future developments on the questions that have been asked to them. This bias was addressed in the model by weighting geography- and industry-specific results with their share of Suffolk’s local GVA or employment as appropriate, and by applying correction factors when no response was recorded for a particular economic sector. We have therefore adjusted for some of the biases inherent to such a small sample size but we cannot guarantee that such biases have been completely eliminated.
In particular, the following weighted25 average results of the survey were used to populate the economic impact model:
► Percentage of employees using the A14 for work-related duties;
► Working time lost per employee per day (non-transport) or per haulage trip (transport) due to congestion on the A14;
► Percentage of sales revenue directly attributable to the existence/requiring the use of the A14 (transport/non-transport);
► Proportion of haulage contracts linked to speed of delivery as a % of turnover; and
► Estimated annual congestion-related losses for the haulage business (fuel costs, speed- based revenue and other).
25 Individual responses were weighted by the proportion of the appropriate aggregate item they represent (such as total turnover, cost of sales or total staff in the sample) or, where appropriate, from the perspective of their respective industrial sector’s contribution to Suffolk’s GVA or Suffolk’s total employment.
EY 13 Methodological approach
2.4 Economic impact model In order to analyse the data extracted from the survey, we designed an economic impact assessment model for Suffolk. This model is fed primarily by our survey responses (see above) as well as standard economic data from the ONS and various economic studies.
The aim of the model is to map expectations regarding the potential economic benefits that could arise from a road improvement programme designed to fully address congestion on the Suffolk section of the A14.
The logical flow of the model is described in Figure 4. More details on the Economic Impact Assessment methodology can also be found in Appendix F. As for our economic modelling assumptions, they are detailed in Appendix C.
Figure 4: Schematic flow of the A14 economic impact model Source: EY
EY 14 Our findings
3. Our findings
3.1 Road investment and economic growth: evidence from the literature 3.1.1 The UK road network challenge In the UK, the road network provides 73% of passenger travel and 65% of freight movements26. There is a severe and widely acknowledged congestion issue highlighted by the fact that 89% of transportation delay is estimated to be on urban roads27. The Department for Transport’s (DfT) forecasts suggest that road usage in England will have increased by 27% in 2025 compared to its 2003 levels, with a potential congestion-related cost of £22 billion per annum by 202528 if the network does not keep up with demand.
Literature shows growing evidence that the quality of the UK’s overall infrastructure (including roads) is poor compared to its international counterparts. The World Economic Forum ranked the UK 28th for ‘quality of overall infrastructure’ and ‘quality of roads’ in its 2013-14 report on global competitiveness29. At the same time, UK road transport infrastructure is deeply affected by budget cuts and the push for decarbonisation and appears to lack a long-term strategy30 when compared, for example, with the national rail network31.
3.1.2 Macroeconomic effects of infrastructure on economic development Investment in infrastructure, although it may exhibit diminishing returns32, is an enabler of other investments, alongside other institutional factors, while sub-optimal investment constrains other investments (Newbery, 2012)33. The level of investment seen as ‘optimal’ should enable appropriate spare capacity to allow free flow of traffic at peak times in order to foster economic growth and to avoid the immediate or latent economic losses generated by congestion or outage34.
Mainstream economic models have generally demonstrated a limited but statistically significant positive effect of investment in transport infrastructure on output, productivity and long-term economic growth. A seminal US paper by Aschauer35 (1989) found an elasticity of GDP to public capital expenditure of 0.436. However, subsequent, more sophisticated, investigation addressing the methodological flaws of Aschauer’s approach tended to find a much lower elasticity of around 0.137 excluding the direct, indirect and induced local effects of construction works38.
Consequence on our assumptions
For the purpose of this study, we have retained the elasticity ratio of 0.1 as a plausible vector of increased economic potential for the UK as a result of the current road improvement
26 Eddington Review, 2006 The Eddington Transport Study: The Case for Action – Sir Rod Eddington’s Advice to Government 27 Ibid 28 Ibid 29 Global Competitiveness Report 2013-14, World Economic Forum, 2013 30 Glaister, S. (2010), Governing and Paying for England’s Roads, RAC Foundation. 31 Ibid. 32 Solow, R.,1956, A Contribution to the Theory of Economic Growth, The Quarterly Journal of Economics, 70 (1): 65- 94. 33 Newbery, D. (2012), Submission to the LSE Growth Commission 34 Rosewell, B. (2012), Submission to the LSE Growth Commission 35 Aschauer, DA, 1989, Is Public Expenditure Productive?, Journal of Monetary Economics, 23 36 i.e GDP increases by $0.4m for every $1m spent on transport infrastructure (excluding direct effect of road works). 37 Lau, SHP. and Sin, CY., 1997, Public Infrastructure and Economic Growth: Time Series Properties and Evidence, Economic Record, 73; Melo, Patricia C. et al The effects of road investments on economic output and induced travel demand: evidence for urbanized areas in the US, Transportation Research Board (TRB) annual meeting, 91st, Washington, DC, 2012. 38 Linked to temporary economic activity generated locally for the duration of road works. It is not considered for the purpose of our study, see Section 3.1.3 below
EY 15 Our findings
proposal. As explained in Section 3.1.1 above, there is concrete evidence that current road investment in the UK has not reached the level that is deemed ‘optimal’.
However, as the A14 is running through Suffolk, Cambridgeshire and Northamptonshire and the proposed improvement will be undertaken only on the Cambridgeshire section, we have to assume that Suffolk will only reap a fraction of the economic benefits associated with the current scheme.
Insight ► Economists and political stakeholders have acknowledged a ‘road challenge’ in the UK.
► Academic studies show a small but statistically significant effect of infrastructure (including road investment) on economic growth.
3.1.3 Microeconomic effects of local road improvements At a microeconomic level, infrastructure spending (including road improvements) primarily tends to enhance the efficiency of the production function, thereby lowering production costs for the private sector. However, empirical and econometric evidence suggests that the scale of this impact is relatively modest and their returns should be compared to those of other competing investment programmes, such as publicly-financed R&D.
Road improvements are deemed to produce the following local economic effects:
1. Lower costs of production by reducing supply chain costs engendered by longer delivery journeys;
2. Increase labour productivity through reduced journey times and reduction of direct and indirect costs associated with congestion;
3. Widen labour catchment areas, as easier journeys allow recruitment in a wider pool of applicants, which in turn can also increase productivity (although the net redistribution effect will depend on the relative economic attractiveness of the competing locations to job-seekers);
4. Increase the general attractiveness of an area for tourism/consumption/relocation purposes, which will in turn stimulate local economic output;
5. Widen potential markets while increasing competition (the direction net effect of which on local GVA will again depend on the economic profiles of competing economic jurisdictions); and
6. Lead to variations in the economic use of land, with transport-intensive activities relocating close to new transport interchanges or improved infrastructures.
Consequence on our assumptions
For the purpose of this study, we have quantitatively tested effects 1, 2 and 3 with survey respondents in Suffolk. We have also developed a qualitative ‘attractiveness’ case for tourism, as the quantitative impact of this factor on economic growth has not, to our knowledge, been empirically tested. We have not considered effects 5 and 6 due to a lack of empirical data, thereby assuming that their structural effects on Suffolk’s economy would have no measurable impact in terms of GVA in all cases.
EY 16 Our findings
3.1.4 Tourism and congestion: is there a case for Suffolk? Suffolk is a coastal county and, as such, enjoys significant tourism. Tourism is considered to be a key sector by Suffolk County Council and makes up one of nine sectors which play a pivotal role in Suffolk’s growth strategy to 202839.
There is no significant evidence in the literature we have reviewed that tourism is generally deterred by the perception of road congestion, especially as other transport infrastructure and networks such as regular rail connections are present.
In the case of Suffolk, a majority of tourists still use a car as means of transportation, although visitors for specific large-scale events such as the Latitude festival are often encouraged to use rail transport to avoid road congestion40.
Whilst the A14 is one of the key entry points joining the Midlands to East Anglia, it appears that congestion on this route is rarely a decisive factor for visitors to Suffolk. In addition to the A14, there exist a number of other routes such as A47 and the A12 which runs along the coast and is deemed by many as a key route for visitors to the region as it runs from London to Great Yarmouth41 via Ipswich.
Local government and business representatives believe that the proposed A14 improvement scheme, although outside of Suffolk, will improve the image of the area, which will indirectly impact tourism in the region as the perception of congestion and limited travel networks will be somewhat alleviated42.
Insight ► At the local level, reduction in congestion directly impacts economic growth mainly through a decrease in supply-chain costs and increased labour productivity.
► Tourism can also benefit from road improvements, although this benefit cannot be quantified.
3.2 Dependence of Suffolk on the A14 3.2.1 Transport businesses Based on responses by 10 transport43 businesses that have their main place of business in Suffolk (and representing c.5% of Suffolk’s annual land transport GVA), we have estimated the following:
► Almost three quarters (74.5%) of the activity of the Suffolk-based transport industry requires significant use of the A14 and, as such, depends on its existence.
► Similarly, more than 60% of Suffolk’s transport sales revenue is linked to some form of speed-based incentive44, which depends on the capacity of the A14 to absorb traffic at peak times and ensure sufficient free-flow.
39 Suffolk Growth Strategy 40 Source: Interview with Dr Carolyn Barnes, Transport and Infrastructure Manager, Suffolk Coastal and Waveney District Councils, 17 January 2014 41 Ibid 42 Ibid 43 Defined in the survey as having one main revenue-generating activity in one of the following areas: Port/Shipping, Logistics, Parcel deliveries, Coach services, Haulage. 44 For the purpose of this study, speed-based revenue/incentive is defined as the contractual proportion of revenue gained/lost as a result/in the absence of successful delivery/transport within an agreed timeframe.
EY 17 Our findings
Table 5: Estimated dependency of Suffolk’s land transport industry on the A14 Source: EY survey results and analysis
Land transportation GVA Estimate
Suffolk land transport GVA (estimated, 2012)45 £ 221m
% requiring the use of the A14 74.5%
% linked to speed-based incentives 62.3%
3.2.2 Other industries Based on individual responses by 45 Suffolk-based non-transport businesses (representing 0.3% of Suffolk’s annual non-land transport GVA), we have estimated the following:
► Almost a quarter (23.5%) of local GVA in Suffolk (excluding land transport) requires significant use of the A14 and, as such, depends on its existence.
► Almost 70% of the value of supplies to local non-transport businesses is delivered using the A14 to a significant extent. More than one third of these supplies are perishable.
Table 6: Other industries’ supply-chain characteristics Source: EY survey results and analysis
Other industries’ GVA Estimate
Suffolk GVA (excluding estimated land transport GVA, 2012) £ 12,873m
Among which, % requiring the use of the A14 23.5%
% of supplies46 delivered via the A14 69.4%
% of perishable supplies46 37.8%
3.2.3 Analysis These results, based on our survey responses, indicate Suffolk’s significant level of economic dependency on the A14. In total, it is almost a quarter of Suffolk’s GVA (24.4%), i.e., almost £3.2bn at current prices that is affected by the existence and capacity of the A14. The A14 is clearly perceived as a significant enabler of economic value creation by local businesses in Suffolk.
Insight More than £3bn, i.e., almost a quarter, of local Suffolk GVA is supported by the existence and capacity of the A14.
Section 3.3 below assesses the economic impact of the current levels of congestion on the A14, based on survey responses and local impact modelling.
45 Excludes rail transportation 46 As a % of total cost of supplies
EY 18 Our findings
3.3 Economic impact of congestion on the A14 in Suffolk Road congestion directly impacts the economy through the loss of valuable time and resources that could be put to alternative, more efficient economic uses. Some of these costs are fully borne by car-commuters themselves (Section 3.3.1) but, by generating inefficiencies in the allocation of resources, congestion has a broader impact on the whole economy and constrains economic growth and employment (Section 3.3.2). 3.3.1 Economic cost of congestion for work-related road use Car-commuting households using the A14 incur direct costs, including the value of time (VoT) wasted due to congestion and the additional fuel costs incurred when staying idle in traffic while commuting to/from work47. Other costs are eventually borne by all UK households: they relate to the loss of economic welfare associated with lost productivity and increased freight costs due to road congestion (see Section 3.3.2. below).
Table 7 below shows a summary of the estimated direct costs of A14 congestion associated with work-related road use in Suffolk.
48 Table 7: Direct annual cost of A14 congestion to Suffolk car-commuting employees Source: CEBR/INRIX, EY survey results
Economic cost of A14 congestion in Suffolk to households £ (p.a.)
Daily commute
VoT 13.7m
Fuel costs 1.0m
Sub-total 14.7m
Other work-related journeys
VoT 30.2m
Total economic cost of A14 congestion in Suffolk to households 44.9m
Per Suffolk car-commuting worker 184.4
Our survey responses indicate that an estimated 25.2%49 of employees working in Suffolk use the A14 for work-related journeys (including commuting) and an average working time loss of 13 minutes per day, i.e., c.55 hours lost per annum. As a part of this group, and based on the analysis of commuting flows from the ONS Annual Population Survey (2011)50, we estimate that 17.5% of the employees working in Suffolk use the A14 for their daily work commute. This represents c.61,850 workers using the A14 in Suffolk for commuting purposes
47 Cf. Appendix C for assumptions on this calculation. 48 2013 prices. Based on The economic costs of gridlock, Report for INRIX, Centre for Economics and Business Research, 2012 (p.8 to11). The average value of time is based on 50% of the hourly full-time wages in the UK. It accounts for the fact that a significant proportion of the time lost in traffic results in longer hours worked and reduced leisure time. Initial 2011 UK average expressed in EUR, then converted to GBP and adjusted for a 3.0% annual inflation rate. 49 Derived from survey responses, weighted for (1) number of staff; (2) employment share of geographical location (district) and adjusted for outliers. Initial response at sample level (37.8%) was weighted for each respondent’s staff number but was deemed not representative of the whole county by local stakeholders. Weighting of sub-samples based on geography introduces a useful spatial dimension in the results but does not reduce inherent biases related to sample size. 50 Commuting flows from the Annual Population Survey, Great Britain, 2011, ONS, using a method adapted from Holmes and Haggett (1977). Inward commuting flows to Suffolk districts (inter-district) are aggregated and weighted according to the probability of commuting by car (69% in the UK in 2011) and using the A14 (1, 0.5, 0.25 or 0 depending on the origin of the flow). For intra-district commuting, we assume that 25% of car commuters in Suffolk Coastal, Mid-Suffolk, St-Edmundsbury and Forest Heath will be using the A14.
EY 19 Our findings
on peak periods on an average working day. Using congestion data from the 2012 study on the “economic cost of gridlock” by the Centre for Economics and Business Research (CEBR) for INRIX51, this translates into an annual loss of 25 hours per annum per driver due to congestion on the A14 during daily commuting only52.
Based on the methodology applied by CEBR and INRIX53, the direct costs to car-commuters of congestion of the A14 in Suffolk can be estimated in the region of £44.9 million per annum (current prices).This would represent an annual £184 per car-commuting household working in Suffolk.
Insight The direct economic cost to households of congestion on the A14 is c. £45m p.a., which represents c. £184 per car-commuter working in Suffolk.
3.3.2 Loss of economic welfare Suffolk’s local economy is mostly impacted by road congestion through lost productive time and increased transport costs that are passed through to the supply chain. 3.3.2.1 Productivity From an economic perspective, had the total working time lost on the A14 been used productively by road-using workers, it could have generated up to £165m of annual direct GVA at current prices, i.e., 1.3% of current annual Suffolk GVA, as shown in Table 8 below.
Table 8: Direct impact of congestion on Suffolk’s GVA from a productivity perspective Source: ONS, EY survey results and analysis
Estimated annual loss of GVA in Suffolk due to congestion on the A14 £
Number of employees in Suffolk 353,100
Proportion of employees using the A14 for work-related journeys (including 25.2% commuting)49
Average productive time loss (p.a.) per employeeError! Bookmark not 55 hours defined.
Average hourly GVA per worker in Suffolk 22.62
Estimated annual direct loss of GVA in Suffolk due to A14 congestion (£)54 110.1m
Current GVA produced in Suffolk (£, 2012) 13,094m
% of current Suffolk GVA 0.8%
Insight Congestion on the A14 costs Suffolk’s economy up to £110m of direct GVA per annum in lost productive time.
51 The economic costs of gridlock, Report for INRIX, Centre for Economic s and Business Research, 2012 52 Cf. Appendix C for full methodology and assumptions on this calculation. 53 Cf.The economic costs of gridlock, Report for INRIX, Centre for Economic s and Business Research, 2012 (p.7-9) 54 Excluding direct effects linked to congestion-related cost increases as well as indirect and induced effects of congestion on Suffolk’s GVA (see Section 3.3.2 and 3.3.3 below).
EY 20 Our findings
3.3.2.2 Supply chain/transport costs Transport businesses Our survey results indicate that transport businesses are significantly dependent on the A14, with almost three quarters of the industry’s turnover linked to the use of the A14 and c. 62% of it includes some form of speed-based incentives (see Section 3.2.1).
As shown in Table 9 below, respondents from the local transport industry also indicated the following costs associated with congestion:
Table 9: Estimated annual losses in the transport industry related to congestion on the A14 Source: EY survey results
Estimated losses related to congestion (weighted average) %
Higher fuel consumption (% of operating costs) 2.8 %
Loss of speed-based revenue (% of turnover) 2.3 %
Other losses (including missed business opportunities (% of turnover) 3.7 %
Direct impact on local GVA of congestion related losses in the transport industry £29.1m
These factors translate into direct costs to the transport industry of £29.1m per annum. For the sake of simplicity and for the purpose of modelling the indirect and induced impact of congestion, we assume that the full estimated direct costs to the transport industry are direct local GVA losses, although this is not always the case in practice55.
In addition, these costs and loss of revenue generate direct GVA redistribution effects between industry sectors within the same economic jurisdiction55. These can have a marginal impact, notably as to their indirect and induced effects, as well as from an employment perspective, as each sector has a different labour productivity. For the purpose of this study, GVA redistribution effects are not considered as material and not taken into account.
Non-transport businesses Survey responses indicate that non-transport businesses in Suffolk are also highly dependent on the A14 from a supply-chain perspective: they source more than 70% of their supplies from providers using the A14 for delivery purposes and c.38% of their supplies require speedy delivery due to their perishable nature (see Section 3.2.2).
Survey responses also evidence congestion-related supply cost increases. More than half of the respondents (c.56% of individual responses) indicated that the current congestion of the A14 had contributed to increase the cost of their supplies over the past five years.
Among these businesses who noticed an increase in their supply costs that they attribute to congestion, only 38.5% passed it through at least partially to their customers, while 73% of respondents indicated that they allowed their net profit margins to decrease and a third also indicated that they had to reduce employment as a result of this increase.
55 Additional costs will only generate net direct losses to the local economy in so far as the additional GVA generated by these costs provides benefits to another economic jurisdiction (i.e., the primary goods and services inducing the cost increase are imported). As for loss of speed-based revenue and missed business opportunities, they create direct GVA redistribution effects either between transporters and their local customers or between competitors within the local haulage industry. A net direct loss in local GVA will arise when (1) the potential or actual haulage customer is not situated in the local area; (2) the ‘missed opportunity’ is not awarded to a local competitor, actually preventing the haulage customer from doing business with his own end client; or (3) when the additional GVA generated by these costs provides benefits to another economic jurisdiction (i.e., the primary goods and services inducing the cost increase are imported).
EY 21 Our findings
Again, it should be emphasised that these cost increases only generate net direct losses to the local economy insofar as the additional GVA created at the beginning of the supply chain ultimately benefits another economic jurisdiction (i.e., the goods and services inducing the cost increase are imported). When it comes to actual supply cost increases related to congestion, respondents suggest that they are mainly the result of additional fuel costs incurred by transporters. In this case, as both customers and providers of transportation services are operating in the local area, these additional transport costs incurred by local non-transport businesses as a result of inefficiencies in transport infrastructure will create GVA redistribution effects between providers and customers and ultimately between industries that consume fuel and those that produce it (typically oil-refining companies). These additional supply-chain costs should therefore be viewed in the light of a sub-optimal allocation of economic resources and therefore as a net loss of economic welfare for Suffolk.
Insight Congestion on the A14 costs Suffolk’s economy up to c. £29m of direct GVA per annum in additional supply-chain/transport costs, excluding direct GVA redistribution effects.
3.3.3 Indirect and induced effects of congestion As discussed in Section 3.3.1 and 3.3.2 above, the additional direct economic contribution made by workers, who would not be delayed by congestion on the A14 and businesses, which would see costs reduced as a result of the end of congestion, could amount to c. £189m. This could lead to direct job creation in the whole economy.
However, the economic potential currently constrained by congestion on the A14 is not limited to these direct effects. Additional direct output also has an indirect impact on the local economy, linked to the additional demand for goods and services along the supply chain, mainly as part of capital expenditure and intermediate consumption. This additional value created would in turn contribute to create additional indirect jobs in the local supply chain.
In addition, workers in Suffolk would benefit from these additional contributions in terms of increased wages and salaries, which would induce additional local consumption and subsequent value and job creation.
Based on our analysis of individual survey responses, Table 10 below shows the overall economic potential that is currently constrained by congestion on the A14 in Suffolk.
Table 10: GVA and job creation potential constrained by A14 congestion Source: EY analysis Local GVA (£m p.a., current prices) Direct 139.2 Indirect 153.5 Induced 69.5 Total annual GVA potential 362.2 % of current Suffolk GVA 2.8% Employment Direct 4,606 Indirect 1,839 Induced 655 Total 7,100 % of current Suffolk jobs 2.0%
EY 22 Our findings
Insight Overall, congestion on the A14 is currently constraining annual GVA in Suffolk by up to £362m per annum (i.e. 2.8% of current annual Suffolk GVA). The end of congestion on the A14 could also generate up to 7,100 jobs in Suffolk.
3.3.4 Tax revenue Additional local economic contribution automatically generates incremental tax revenue. In 2011, the UK overall tax-to-GDP ratio was 37.8%56.
Table 11 shows the Suffolk-based tax revenue potential currently constrained due to congestion on the A14 as suggested by our analysis. It amounts to c. £137m per annum in nominal terms, 6.8m of which would be raised directly by local authorities.
Table 11: Tax generation potential constrained by A14 congestion Source: EY analysis, Eurostat, Institute for Fiscal Studies (IFS)
£m p.a.
Total annual GVA potential constrained by congestion (direct, indirect and induced) 362.2
UK overall tax-to-GDP ratio (%)56 37.8%
Total potential additional tax revenue generated 136.9
Among which, local taxes56 6.8
Insight The end of congestion on the A14 could generate up to £137m of additional tax revenue per annum in Suffolk, 6.8m of which would be raised as local taxes.
3.3.5 Potential impact of proposed improvement scheme The analysis laid out above allows us to put in perspective the potential impact of the current improvement scheme for the A14 proposed by the Highways Agency (see Section 1.3.3). The cost of this 22-mile Cambridge-to-Huntingdon improvement57 has been estimated in the region of £1.5bn at current prices, while the cumulative cost of the ancillary A14 improvement programmes is about £251m58.
If we hold the investment-to-GDP ratio of 0.1 evidenced in academic literature as a relative consensus (see Section 3.1.2), our analysis suggests that this scheme could yield up to £150 to £175m of annual economic contribution in today’s money from 202059. This scale of economic benefits is supported by quantitative evidence from survey responses.
However, these benefits will be shared between Cambridgeshire (where the improvement physically takes place), Suffolk, Northamptonshire but also the rest of the UK, which also benefits from a better functioning A14.
As the improvement will take place in Cambridgeshire, on the Cambridge to Huntingdon section of the A14, we can reasonably assume that this county will be the principal
56 Ratio of total tax and social contributions to GDP, source: Eurostat, 2011, including corporation tax, income tax, social contributions and other taxes, duties and levies (including VAT). An average of 95% of government revenue is raised by central government (including social security funds, source: IFS, 2007), some of which is redistributed to local government in the form of grants, while 5% is raised directly by local authorities. 57 The A14 is 127-miles long, see Section 1. 58 Cf. Section 1.3.3.2. Source: Highways Agency 59 Expected end of construction works in the current proposal.
EY 23 Our findings
beneficiary of the scheme from a local economic development perspective. The improvement scheme will facilitate commuting and deliveries in Cambridgeshire as well as workers’ mobility between the western part of Suffolk and Cambridgeshire. This can have productivity effects in both counties. The current scheme can also increase competition between Cambridgeshire and Western Suffolk businesses, the net effect of which is difficult to predict.
However, Suffolk’s haulage industry would be likely to benefit from the current improvement projects. Our survey suggests that the journey length of a Suffolk haulier on a typical job is broadly equal to the full length of the A14 (i.e., 127 miles), which means that the time taken for a significant proportion of haulage jobs from the Port of Felixstowe could be reduced as a result of this improvement.
Insight Under current economic assumptions as to the effect of infrastructure growth on GDP, the proposed improvement scheme could generate an annual £150-175m p.a. in additional GVA and £57-66m p.a. in extra tax revenue, to be shared between Cambridgeshire, Suffolk, Northamptonshire and the rest of the UK.
3.4 Summary and conclusion The economy of Suffolk is diversified and its population is growing. Its particular structure, characterised by the importance of the Port of Felixstowe, makes it particularly dependent on logistical flows into the mainland enabled by fully-functioning transport infrastructures. The A14, as the only major local trunk road, is congested and its current capacity is considered insufficient in the light of the current realignment of trade flows and increased volumes of traffic from the Port of Felixstowe60.
From a macroeconomic perspective, infrastructure investment is considered an enabler of economic growth at the local and national level, as long as the network has not reached its ‘optimal’ level, when additional investments do not provide additional net benefits, notably by reducing congestion.
In a context of prolonged contraction of public expenditure following the financial crisis, the UK is confronted with a widely acknowledged ‘road challenge’. In the case of the A14, which is a UK strategic road, congestion has been a permanent and enduring issue and can be seen as a constraint put on local economic development in Suffolk but also on the neighbouring counties and, to an extent, for the whole country. The current £1.5bn road improvement proposal put forward by the HA attempts to address one of the main congestion hotspots on the A14. Once implemented, our analysis suggests that it could generate annually up to £150-175m in additional GVA and up to £57-66m in additional tax revenue to be shared between Cambridgeshire, Suffolk, Northamptonshire and the rest of the UK.
Based on the analysis of responses to the survey, we have also modelled the potential impact that further improvement initiatives that could eventually lead to elimination of congestion could have on Suffolk's economy. Table 12 details this, and highlights show that eliminating the effects of A14 congestion on Suffolk’s economy could:
► Yield up to £362m in additional annual GVA for Suffolk;
► Create up to 7,100 local jobs; and
► Generate up to £137m in additional tax revenue.
60Source: Interview with Paul Davey, Head of Corporate Affairs, Port of Felixstowe, 22 January 2014
EY 24 Our findings
Table 12: Summary of annual economic impact of current congestion on the A14 for Suffolk Source: EY analysis Direct cost of A14 congestion to commuters (£m, p.a.)
Total estimated direct cost of congestion to Suffolk commuters using the A14 44.9
Gross Value Added (£m) to Suffolk (p.a.)
Direct4 139.2
Indirect4 153.5
Induced4 69.5
Total annual GVA potential (current prices)4 362.2
% of current Suffolk GVA 2.8%
Tax revenue (£m p.a.)
% Tax revenue-to-GDP ratio 37.8%
Total annual tax revenue potential (current prices) 136.9
Employment
Direct 4,606
Indirect 1,839
Induced 655
Total 7,100
% of current Suffolk jobs 2.0%
Potential economic benefits of the current A14 improvement scheme (shared)
GVA (£m p.a.) 150-175
Tax revenue (£m p.a.) 57-66
EY 25 Sources
Appendix A Sources
Academic and official literature A14 Study, Output 1, Steer Davies Gleave, 2011
Transport and the Economy, Report to the Department for Transport, SACTRA, 1999
Global Competitiveness Report 2013-14, World Economic Forum, 2013
Governing and Paying for England’s Roads, Gleister S., RAC Foundation, 2010
The Eddington Transport Study: The Case for Action – Sir Rod Eddington’s Advice to Government, 2006
Economic Impact of Road Infrastructure Investment, Report to the Welsh Assembly, DTZ- Pieda Consulting, 2004
Transport Infrastructure, Business Costs and Business Location, Report for the Department for Transport, EY, 1996
The Effect of Road Investment on Economic Development in the UK, Parkinson, M., Government Economic Service working paper no43, Department for Transport, 1981
Developments in the Retail Market and their Effect on Freight Distribution, Quarmby, D., Journal of Transport Economics and Policy, vol. I, pp.1-42, 1989
A Contribution to the Theory of Economic Growth, Solow, R.,1956, The Quarterly Journal of Economics, 70 (1)
The Effects of Road Investments on Economic Output and Induced Travel Demand: Evidence for Urbanized Areas in the US, Melo, P. et alii, Transportation Research Board (TRB) annual meeting, 91st, Washington, DC, 2012.
How High is the Social Rate of Return to Investment? Oulton, N., and Young, G., 1996, Oxford Review of Economic Policy, 12 (2)
Public Infrastructure and Economic Growth: Time Series Properties and Evidence, Lau, SHP and Sin, CY, 1997, Economic Record, 73
The Economic Costs of Gridlock, Report for INRIX, Centre for Economics and Business Research, 2012
Comparing user costs through different container ports, MDS Transmodal Felixstowe Report, 2013
Commuting flows from the Annual Population Survey, Great Britain, 2011, Office of National Statistics
Interviews
Dr Carolyn Barnes, Transport and Infrastructure Manager, Suffolk Coastal and Waveney District Councils, 17 January 2014
Fiona Johnson, Economic Development Officer, Marketing and Communications, The Suffolk Coast, a Destination Management Organisation, 21 January 2014
Paul Davey, Head of Corporate Affairs, Port of Felixstowe, 22 January 2014
EY 26 Suffolk economic profile
Appendix B Suffolk economic profile
Table B1: Economic profile of Suffolk Source: ONS
Population (‘000s) 737.6
Total employed (‘000) 353.1
Unemployment rate 6.4%
Total GVA (£m-2012 prices) 13,094
Labour productivity (£/job) 36,700
GVA per capita (£) 17,600
Carbon emission per person (t) 7.1
Table B2: Suffolk: main economic data at the district level Source: ONS
District Population GVA Unemployment (%)
Actual 2012 % growth 2012- % growth Actual 2012 2012 (‘000s) 16 2016-20 (£m)
Babergh 88 1.7% 1.5% 1,174 3.7%
Forest Heath 61 5.2% 4.5% 981 7.0%
Ipswich 134 3.8% 3.5% 2,942 9.9%
Mid Suffolk 98 4.0% 3.8% 1,478 3.8%
St- 112 2.9% 2.8% 2,593 3.7% Edmundsbury
Suffolk Coastal 124 3.6% 3.6% 2,353 4.4%
Waveney 116 1.6% 1.8% 1,444 10.9%
Suffolk County 732 3.2% 3.0% 13,094 6.4%
East Anglia 5,907 4.0% 3.8% 111,083 6.7%
UK 63,705 2.4% 2.1% 1,360,925 7.5%61
61 Source: ONS, as at 31 October 2013
EY 27 Economic assumptions
Appendix C Economic assumptions
Primary data include a 2011 UK input/output (I/O) table to which the following assumptions apply.
Table C1: Basic economic modelling assumptions Sources: ONS, EY analysis, Academic literature
Basic assumptions
Total employed in Suffolk 353,100
Total GVA in Suffolk (£m-2012 prices) 13,094
Average annual hours worked per employee in the UK (2012) 1,654
Assumed road spending-to-GDP ratio (based on current academic consensus) 0.1
Keynesian consumption multiplier 1.21
Annual CPI increase 3.0%
Annual Index of Labour Cost Per Hour (“ILCH”) increase 3.0%
Table C2: Commuting assumptions Sources: CEBR/Inrix, EY survey and analysis
Commuting assumptions
UK modal share of car for commuting purposes (2011) 69%
Estimated % of employees working in Suffolk using the A14 for work-related purposes 62 25.2% (including commuting)
Estimated % of employees working in Suffolk using the A14 for commuting 17.5%
Average annual working time lost due to congestion on the A14 per employee63 55.2 hours
Average annual working time lost due to congestion on the A14 per employee 24.8 hours (commuting only)
Commuting VoT (2011, UK average) £8.43 per hour
Average number of full-time employees per household 1.0
Annual traffic increase following improvement 0%64
62 Based on survey results, adjusted for geographical location of respondents 63 Including commuting and other work-related duties requiring the use of the A14. Based on survey results. 64 Traffic is assumed to remain constant over time following the implementation of the road improvement programme.
EY 28 Economic assumptions
Table C3: Estimated annual wasted hours per vehicle for Suffolk employees (peak hours) Source: CEBR/Inrix, EY analysis
Annual wasted hours Employment Comparable LUZ per vehicle
Edinburgh 29.3 448,700
Nottingham 32.1 216,100
Cardiff 25.2 204,500
Leicester 24.2 191,900
Coventry 25.2 168,700
Kingston-Upon-Hull 23.0 151,000
Portsmouth 28.3 115,500
Belfast 33.8 107,000
Stoke-on-Trent 25.0 97,700
Weighted average 27.6
Discount for rural element of Suffolk (-10%) (2.8)
Suffolk (for employees using the A14) 24.8
Table C4: Additional congestion-related costs to the transport industry Source: EY survey and analysis
Additional costs linked to congestion on the A14 borne by the transport industry
Higher fuel consumption (% of operating costs) 2.8 %
Loss of speed-based revenue (% of turnover) 2.3 %
Other losses, including missed business opportunities (% of turnover) 3.7 %
Table C5: Composition of Suffolk’s GVA Source: ONS, EY analysis
Sector GVA in Suffolk % % (UK) Direct GVA- (2012, £m) (Suffolk) to-output (Suffolk)
A Agriculture, forestry and fishing 255 1.9 % 0.7 % 35.5 %
B Mining and quarrying 470 3.6 % 2.3 % 13.2 %
C Manufacturing 1,928 14.7 % 10.3 % 27.5 %
D Construction 1,053 8.0 % 8.8 % 40.5 %
E Distribution; transport; accommodation and food 2,768 21.1 % 18.2 % 33.1 %
- Land transport 221 1.7% 1.5% 31.6%
F Information and communication 569 4.3 % 6.5 % 24.4 %
EY 29 Economic assumptions
Sector GVA in Suffolk % % (UK) Direct GVA- (2012, £m) (Suffolk) to-output (Suffolk)
G Financial and insurance activities 626 4.8 % 8.6 % 27.5 %
H Real estate activities 1,358 10.4 % 10.6 % 14.3 %
I Business service activities 1,251 9.6 % 16.8 % 24.3 %
J Public administration; education; health 2,355 18.0 % 14.2 % 23.6 %
K Other services and household activities 461 3.5 % 3.0 % 23.9 %
Total 13,094 100% 100%
EY 30 Survey
Appendix D Survey
Background information
The following management information will be used solely to model the economic impact of the A14 on Suffolk’s economy. Information provided here remains strictly anonymous and confidential.
Only questions marked with an asterisk (*) require an answer; however, your answers to the optional questions would be greatly helpful.
Q1 – Number of employees in Suffolk
Full-time Part time
Q2 – Nearest town to your main point of business in Suffolk?
Bury-St-Edmunds Felixstowe Ipswich Lowestoft Newmarket Stowmarket Sudbury
Q3 – Approximate turnover in 2012-13 (or latest financial year known) in £ million (up to one decimal place)
Q4 – Approximate gross margin in 2012-13 (or latest financial year known) as % of turnover
Q5 – Primary industry sector/activity
Manufacturing Energy ICT Financial services Food, Drink and Agriculture Transportation, ports and logistics Biotechnologies and bloodstock Tourism Culture and creative industry Other (please specify)
The A14 and you
This section helps us understand your perception of the economic effects of congestion on the A14 as well as your views on how well the planned road improvements would respond to these effects.
Q6 – What effect(s) does congestion on the A14 have on your business? Tick all the boxes that apply.
Increased commuting time for my employees Delays in deliveries by suppliers Loss in revenue due to additional time spent on existing customers (visits, deliveries, etc…) Loss in revenue due to fewer customers visiting Higher transportation and freight costs
EY 31 Survey
No effect on my business Other (please specify)
Q7 – What benefits do you think the proposed improvement scheme will bring to your business? Tick all that apply.
Reduce commuting time for my employees Reduce costs associated with freight and supply chain management Increase my turnover due to less time spent on existing clients Increase my turnover due to more customers visiting, from a wider area Increase my turnover due to existing customers coming back more frequently My business will not benefit from the improvement of the A14 Other (please specify)
Effect on staff
This section helps us understand the scale of the disruption caused to your business by the congestion on the A14 and its effects on the mobility and productivity of your employees.
Only questions marked with an asterisk (*) require an answer; however, your answers to the optional questions would be greatly helpful.
Q8 – What proportion of your staff live in:
*What proportion of your staff lives in:
Suffolk? 0-25% 25-50% 50-75% 75-100%
Cambridgeshire? 0-25% 25-50% 50-75% 75-100%
Other UK county? 0-25% 25-50% 50-75% 75-100%
Q9 – What proportion of your staff regularly use the A14 for the purpose of commuting to work or during work (for deliveries, customer or supplier visits for instance)?
0-25% 25-50% 50-75% 75-100%
Q10 – Please estimate the working time lost per employee per day (in minutes) due to the congestion on the A14.
0-10 min 10-30 min 30-60 min More than 60 min
EY 32 Survey
Q11 – Do you think that the improvement of the A14 will have an impact on your employees’ productivity?
Yes, in the short-term only, as future increase in traffic will catch up with planned improvements Yes, in the long-term, as planned improvements will suffice to accommodate over-capacity Insignificant or no impact, even in the short-term
Q12 – If you answered ‘Yes’ to question 11, please estimate the working time gained per employee per day (in minutes) thanks to the improvement of the A14.
0-10 min 10-30 min 30-60 min More than 60 min Not applicable (answered ‘No’ to question 11)
Q13 – Do you feel the need to attract staff from a wider area and why?
Yes, as I want to grow my business and attract a wider talent pool. Yes, as I want to grow my business on new markets and attract staff who can operate on these markets. Yes, as I want to improve my existing capacity but I have no immediate plans for growth. No, I am not interested in attracting staff from a wider area. Not applicable Other (please specify)
Q14 – If you answered ‘Yes’ to Question 13, do you think that the expansion of the A14 will enable you to draw staff from a wider area due to easier commuting?
Yes No Not applicable
Effect on suppliers
This section seeks to assess your dependency on the A14 for supplies as well as the scale of the effects of congestion on your supply chain.
Only questions marked with an asterisk (*) require an answer; however, your answers to the optional questions would be greatly helpful.
Q15 – What proportion of your supplies is delivered via the A14 (as % of the total cost of your supplies)?
0 to 25% 25 to 50% 50 to 75% 75 to 100%
Q16 – Of those supplies, what proportions are perishable or require speedy delivery due to the nature of your business (as % of the total cost of supplies delivered via the A14)?
0 to 25% 25 to 50% 50 to 75% 75 to 100%
EY 33 Survey
Q17 – Do you think that the current congestion of sections of the A14 has contributed to an increase in the cost of your supplies over the past five years?
Yes No Not applicable
Q18 – If you answered ‘Yes’ to Question 17, have you passed this cost increase through to your customers? Please estimate the fraction of costs you have passed through to your customers.
Yes, entirely Yes, but only partially (please state estimated % below) No Not applicable State estimated % of pass-through
Q19 – If you answered ‘Yes’ to Question 17, did you address part or all of the cost increase in any of the following ways? Tick all that apply.
Reduced production Postponed expansion plans Reduced employment Allowed a decrease in net profit margin Other (please specify)
Q20 – Once the new A14 is operational, do you think that your delivery/haulage costs will go up, go down or stay the same as a result of the increase in capacity of the road?
Go up Go down Stay the same Not applicable
Effect on customers
This section aims to evaluate your degree of dependency on the A14 in order to access and possibly expand your customer base.
Only questions marked with an asterisk (*) require an answer; however, your answers to the optional questions would be greatly helpful.
Q21 – What percentage of your current turnover/sales revenue can be attributed to the existence of the A14?
0 to 25% 25 to 50% 50 to 75% 75 to 100%
Q22 – What is the geographic location of your existing customer base? Please choose the percentage range of sales revenue for each of the locations below.
Suffolk 0 to 25% 25 to 50% 50 to 75% 75 to 100%
EY 34 Survey
Cambridgeshire 0 to 25% 25 to 50% 50 to 75% 75 to 100%
Other UK county/Ireland 0 to 25% 25 to 50% 50 to 75% 75 to 100%
Abroad (non-UK & Ireland) 0 to 25% 25 to 50% 50 to 75% 75 to 100%
Q23 – Do you predict that an expansion to the A14 will have a beneficial impact to your company by enabling you to reach new customers or via an increased demand from current clients?
Yes, an improved A14 will help me reach new customers outside of my existing business boundaries. Yes, an improved A14 will encourage my existing customers to increase their demand for my goods/services. Yes, it will help me reach new customers and encourage my existing customers to increase their demand. No, I do not believe that it will have a significant impact on my turnover either way. Not applicable
Other comments on consequences of congestion on the A14 (optional)
Q24 – If you so wish, please use the space below to provide any other comments you find suitable for the purpose of assessing the economic impact of the A14 on your business and Suffolk’s local economy (please limit your answer to 100 characters).
Haulage/transport businesses only
As per the nature of their business, haulage/transport companies are especially affected by road congestion. Due to their relative weight in Suffolk’s local economy, we have designed a specific set of questions for them. Please do not answer if one of your main revenue- generating activities is not in any of the following areas: Port/Shipping, Logistics, Parcel deliveries, Coach services, Haulage.
Q25 – What proportion of your transportation/freight contracts (% of turnover) requires the use of the A14? Please choose the appropriate percentage range below.
0 to 25% 25 to 50% 50 to 75% 75 to 100%
Q26 – What proportion of your freight contracts (% of turnover) is linked to speed (as opposed to a flat rate)? Please choose the appropriate percentage range below.
0 to 25% 25 to 50% 50 to 75% 75 to 100%
EY 35 Survey
Not applicable to my activity
Q27 – What is the average journey length for a typical freight contract requiring the use of the A14 (number of miles)? Please choose the appropriate range below.
Less than 50 miles 50-100 miles 100-200 miles 200 miles + Not applicable
Q28 – What is the average total journey length for freight contracts requiring the use of the A14 (in minutes)? Please choose the appropriate range below.
Off-peak use of the A14 Less than an hour 1-2 hours 2-4 hours 4-5 hours More than 5 hours Not applicable
Use of the A14 during peak times Less than an hour 1-2 hours 2-4 hours 4-5 hours More than 5 hours Not applicable
Q29 – What is the estimated annual loss incurred due to higher fuel consumption, loss of speed-based variable remuneration and other factors consecutive to congestion on the A14?
Higher fuel consumption (% of your operating costs) Negligible (0 to 1%) 1 to 5% 5 to 10% More than 10% Not applicable
Loss of potential speed-based incentives (% of your turnover) Negligible (0 to 1%) 1 to 5% 5 to 10% More than 10% Not applicable
Other loss of revenue due to congestion (% of your turnover) Negligible (0 to 1%) 1 to 5% 5 to 10% More than 10% Not applicable
Q30 – If you so wish, please use the space below to provide any other comments you find suitable for the purpose of assessing the economic impact of the A14 on your business and Suffolk’s local economy (please limit your answer to 100 characters).
EY 36 Survey responses
Appendix E Survey responses
Figure E1: Nearest town to main place of business in Suffolk Source: EY survey results, based on individual responses
2%
13% 14% 4% Bury-St-Edmunds 7% Felixstowe 9% Ipswich Lowestoft Newmarket Stowmarket Sudbury 53%
Figure E2: Industrial sector of respondents Source: EY survey results, based on individual responses
Agriculture, forestry and fishing 4% Mining and quarrying 7% 18% Manufacturing Construction 4% Distribution; transport; accommodation and food 27% Information and communication Financial and insurance activities
25% Real estate activities Business service activities Public administration; education; health 11% 4% Other services and household activities
Figure E3: Effects of A14 congestion on respondents’ businesses Source: EY survey results, based on individual responses
60.0 %
51.2 % 50.0 % 43.9 % 41.5 % 40.0 %
29.3 % 30.0 %
19.5 % 19.5 % 20.0 % 17.1 %
10.0 %
0.0 % Increased Delays in Loss in revenue Loss in revenue Higher No effect on my Other commuting time deliveries by due to time due to fewer transportation business suppliers spent on customers and freight costs existing visiting customers
EY 37 Survey responses
Table E4: Qualitative comments from individual survey responses Source: EY survey results
Respondent Comments
8 The A14 supports the Port of Felixstowe. If this has a toll imposed on it, then the Port will suffer competitively in relation to other Ports such as Thames Gateway, Tilbury and Southampton
10 We also need to be looking at the bigger picture: travelling north on the A140 and also to the east, both are nightmares!
11 The impact of the A14 being unfit for purpose is not only predictable delay but the loss of entire events due to frequent extended delay due to lack of viable alternative routes and poor management of delay events by the highways agency and police.
13 The A14 has no direct impact on the Chamber but affects many of our members and has an impact on tourism in the area.
17 You forgot to mention Haverhill in your town comparison. We are affected, but not to the same degree as others. Ipswich doesn’t seem to know we exist…
24 The A14 is a conduit for freight from the ports of Suffolk to Birmingham and other cities. With 2 lanes slow overtaking makes for congestion.
25 I run two companies, one in Haverhill with a turnover of £22 million and one in Stoke turning over £30 million. The A14’s current congestion problems are a major issue for my staff commuting between the two businesses and it causes major problems for customers visiting the Haverhill site and prevents me attracting high quality employees and also expanding my business in Suffolk.
30 The main impact to our business and hundreds of lost hours in employee time per year is due to accidents on the Orwell Bridge. All that is needed are average speed cameras between Nacton and Copdock to solve the problem, as well as a safer way for vehicles to join the road from the garage before the Orwell Bridge starts. Improving the A14 up near Cambridge will have no benefit for us whatsoever.
40 Quite frankly, whether there is a charge or not on the A14 is a secondary consideration. The primary consideration is to get it into a 6-lane motorway right across the country as quickly as possible. It is THE vital arterial East/West road. I have absolutely no hesitation in believing that it will have a substantial economic and social benefit, not just for this region, but for the entire country.
45 While my business will not directly benefit from the planned improvements to the A14 these changes will benefit the local economy on a wider scale which in turn will benefit my business.
Transport-specific
9 Concerning ‘other loss of revenue…’ we operate urgent same day delivery throughout the UK. We can be transporting anything – for example, a delayed spare part means the end customer plant or machine is down longer and in turn the more it costs their operation. Another, which has cost our business dearly – driver stress and frustration has caused an accident (we were NOT at fault I hasten to add) This caused the complete inability of delivery, a written off motor vehicle and physical injury.
20 The A14 is not fit for purpose. The proposed Huntingdon Southern bypass will only alleviate congestion on a fraction of the road. We need major improvements in Suffolk at Felixstowe, 7- Hills, Nacton (J57), Orwell Bridge (Ipswich Northern Bypass?), Copdock. We also need more off-road lorry parks.
EY 38 Economic impact assessment
Appendix F Economic impact assessment
Economic activities are related to one another within the wider economy through a dense network of supplier-customer relations, and thus produce effects that cross corporate and sector borders.
Each unit of output produced in a specific sector of the economy requires the production of additional units of goods and services in other parts of the economy to fulfil its input requirements.
Production of an additional unit of any good or service also requires the application of additional amounts of labour.
Therefore, any increase in the demand for goods and services in the economy will trigger yet more demand for other goods and services, to fulfil the input needs described above.
The amount of labour as well as the quantity and type of goods and services necessary to produce an additional unit of output is industry-specific and depends on the technology used.
The Input-Output model developed by Wassily Leontief describes such relationships and allows quantifying such additional demand for labour, goods and services through the computation of industry-specific multipliers.
Using the Input-Output model as its main building block, the Economic Impact Assessment methodology allows quantifying a productive activity’s total contribution to the wider economy. Within this framework, three distinct effects can be identified and measured:
1. A Direct effect arising from the initial increase in economic activity, the GVA it generates and the additional jobs it creates.
2. An Indirect effect arising from the additional demand of goods and services along an industry’s supply chain.
3. An Induced effect arising as an effect of households spending a share of the additional income generated through the provision of labour on the consumption of goods and services.
A comprehensive assessment of the impact of congestion in terms of local economic output, local GVA (Gross Value Added) and employment has been produced, using an Economic Impact Assessment methodology.
The Economic Impact Assessment quantifies the effect of the proposed A14 improvement scheme on three key economic variables:
► Gross Value added
► Employment
► Government Revenue/taxation
Multiplier calculations
Output multipliers are obtained from Input-Output tables, through a mathematical process known as Leontief Inverse. Input-Output tables are readily available for the UK from the ONS.
By applying industry GVA/Output ratios and apparent labour productivity measures to the Output multipliers thus obtained, industry level GVA multipliers and employment multipliers will be produced. GVA/Output ratios and apparent labour productivity measures are obtainable from statistical data published by the ONS.
EY 39
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